A New Way to Rank Economic Growth in America's Metros

A construction worker stands on an outside balcony at Brickell City Centre, a $1.05 billion mixed-use development located in Miami's financial district.
(AP Photo/Lynne Sladky)

It’s often said that cities are engines of economic growth. But no two engines are built alike—and not every engine drives all passengers to the same place.

That’s one way of phrasing why many economists feel that simple metrics of growth, such as gross metropolitan product, jobs, or wages, don’t sufficiently measure growth in machines as complex as cities.

Released Thursday, a Metro Monitor report from the Brookings Metropolitan Policy Program ranks the 100 largest U.S. metropolitan areas by growth, as well as by prosperity and inclusion, during the recovery from the recession. What does that mean? Besides charting growth—GMP, jobs, and aggregate wages—the report analyzes how that growth translates to individual prosperity, based on productivity, average annual wages, and average standard of living. It also looks as whether that growth and prosperity includes all people, across income and race brackets.

How did America’s cities fare on these different metrics, and how are the metrics related to one another?

The vast majority of metros grew, but not evenly

Between 2009 and 2014, 95 of the 100 biggest metros saw growth in GMP, jobs, and aggregate wages. But the degree of growth varied tremendously, and depended largely on industry and geography. (Find rankings for the top and bottom 20 cities for growth, prosperity, and inclusion, at the bottom of this post—and don’t miss Brookings’ interactive data feature here.)

For example, coastal and mountain metros in the West focused heavily on IT—such as Seattle, Portland, San Francisco, San Jose, Provo, and Denver—saw big growth during the recovery. Texas energy heavy-hitters Austin and Houston performed strongly, as did metros with large education or health care sectors, such as Columbus, Louisville, Madison, and Nashville. Midwest manufacturing towns like Grand Rapids, Indianapolis, and Detroit also saw notable gains.

(Brookings)

However, Sun Belt metros hit especially hard by the housing crisis from Florida to Arizona had a harder time recovering. Most Northeast metros also saw less growth during the recovery compared to their peers—although that reflects longer-term growth trends rather than specific post-recession effects, according to the report.

Growth does not necessarily equate prosperity

While the vast majority of big metros saw their economies grow from 2009 to 2014, only 63 of them saw increases in per capita prosperity. Some metros with fast-growing technology and professional services sectors saw productivity, average annual wages, and the standard of living go up, along with overall growth. In San Jose, productivity shot up 12 percent.

But growth doesn’t necessarily equate with prosperity: Some mountain metros in the West ranked low on prosperity measures, as did Sun Belt towns like Atlanta, Charleston, and Raleigh—all places that performed relatively well on growth. This reflects these metros’ unique and bumpy paths out of the recession, especially as some shifted from consumption- and housing-oriented economies towards higher-value, production-based growth.

(Brookings)

Prosperity becomes an even more complicated story when assessed over different time periods, and by the three different indicators the study used to measure it. Only 37 of the nation’s 100 largest metropolitan areas showed consistent and continuous improvements in productivity, average annual wages, and the standard of living, starting from before the recession across a 10-year period (2004 to 2014).

Inclusion is something different

If prosperity was more challenging than overall growth following the recession, extending those advancements to all income classes proved even more elusive. “Rarely do we see growth and prosperity benefiting the lower half of the income distribution,” Richard Shearer, a senior project manager at the Metropolitan Policy Program and the lead author of the report. “So these things aren’t related to each other.”

Indeed, only eight out of the 100 metros enjoyed across-the-board advancements in the median wage, relative income poverty rate, and employment rate from 2009 to 2014: Charleston, Chicago, Dayton, Denver, Provo, Salt Lake City, San Jose, and Tulsa. Improvements in inclusion probably had as much to do with demographics as with industry dynamics, the authors of the report explain:

During the recovery, for instance, metropolitan areas in the Great Lakes region that saw notable improvements in prosperity also performed well on inclusion. They registered some of the largest increases in the employment rate and the largest decreases in the relative poverty rate among large metropolitan areas. However, this may reflect more of a bounceback from the devastating effects of the downturn than a surging ahead.

It also bears mentioning that a high ranking on inclusion doesn’t necessarily mean that inclusion is growing in that metro; rather, that metro may not have fallen as far behind as its peers. From 2009 to 2014, 80 of these cities saw their median wage fall, 53 saw relative income poverty increase, and 17 metros felt declines on all three “inclusion” indicators.

(Brookings)

And even in metros where middle- and low-wage workers saw wages and poverty levels improve, racial disparities grew. In 58 of the 100 metros, the median wage gap increased between whites and people of color. In 69, the relative income poverty rate gap also widened.

Can metros have it all—growth, prosperity, inclusion by income, and inclusion by race? Yes, though it’s uncommon: Only nine metros attained above-average rankings on all four metrics after the recession: Dallas, Houston, Oklahoma City, San Antonio, San Jose, Seattle, Grand Rapids, Minneapolis/St. Paul, and Louisville.

What can municipal leaders take away from these findings? Aiming for sheer growth and productivity isn’t enough to extend the benefits of a robust economy to everyone. “A broader suite of strategies is necessary,” Shearer says. No one magic policy will work for every metro. Rather, leaders should assess the unique features of their local economies to encourage inclusion in addition to growth and prosperity.